? An exclusive worldwide collaborative agreement: If Veolia satisfies the initial objectives and milestones of the agreement (e.g., identify a red mud site for the first plant, secure financing), it will receive the exclusive global license for the Orbite process for the treatment and recycling of red mud from the Bayer process.

? The partnership includes the construction of the first plant for the treatment of red mud using the Orbite process: As per the agreement, a demonstration plant will be built first; if successful, Veolia will secure a worldwide license for the processing of red mud only. Veolia will also be the operator of the plants while Orbite will offer technology support.

? Economic details of the agreement have not been disclosed: Veolia will likely own all the by-products from the remediation process (e.g., alumina, iron, rare earths, etc.). Orbite will receive a royalty from the plant that we estimate could be 5–10% of revenue, which will include the sale of by- products. This could significantly boost Orbite’s income ahead of the commercial production of its first smelter-grade alumina.

? Veolia will be responsible for the financing: Veolia will be responsible for 100% of the financing of the remediation plants. The company will also assume most of benefits once the technology is established, by collecting most of the revenue.

ACTION — Significant Validation; BUY

This agreement is a significant vote of confidence in the Orbite process. The company’s revenue from licensing could augment significantly, while it focuses on the development of its alumina refinery business. We maintain our $8.00 target price and Speculative Buy recommendation.